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2/10/2006

Video games pioneer Atari fears plug set to be pulled

ATARI, the company which became the first giant of the video games industry, today warned there was "substantial doubt" about its ability to continue as a going concern.The firm, whose shares fell by more than two-thirds in the past year, also reported an unexpected quarterly loss, and said finance boss Diane Baker had resigned to pursue other opportunities.Atari, which created a sensation with its "Pong" arcade game in the 1970s, has been working to revive its business at the same time that a move to new console technology is denting overall industry sales.Chairman and chief executive Bruno Bonnell said: "We will do everything in our potential to guarantee that Atari goes on," but stressed there was no guarantee such efforts would succeed.The games group confirmed that HSBC Business Credit (USA) would not currently extend further credit. However, one analyst noted that Atari had ample assets and that it could reduce operating expenses to stay afloat.The video games industry is transitioning to next-generation console technology, with Microsoft first to market with its Xbox 360 in November. However, holiday shortages exacerbated declining sales of existing games and consoles as consumers saved for cutting-edge products.Sony, the number one console maker, and rival Nintendo are set to release their machines this year. Analysts expect 2006 to be another trying year for the sector.Mr Bonnell said the drop in holiday sales was bigger than Atari had anticipated.The company is looking at various cost-reducing options, including a "serious restructuring," the sale or license of selected intellectual property and the sale or closure of its studios, he added.